Exhibit 10.46


 


2009 EXECUTIVE MANAGEMENT

INCENTIVE COMPENSATION PROGRAM


 


OBJECTIVE


 


The
objective of the 2009 Executive Management Incentive Program (EMIP) is to
reward participants  for helping the company achieve critical
business results. The Program has been designed to incent those  employees who
have a direct impact on the company’s ability to meet our operating profit
(EBITDA)  goals. The EMIP is structured to reward participants for the
achievement of these key financial goals.


 


PARTICIPATION


 


Participants
in the 2009 Executive Management Incentive Compensation Program include
Corporate  Officers, Vice Presidents and Directors. Participation can be extended
to other key employees as  recommended and approved by
the Generac Compensation Committee.


 


DEFINITIONS


 


·                                         EBITDA


 


Earnings
before Interest, Taxes, Depreciation and Amortization as defined and reported
in credit  agreements between Generac and its lenders.


 


·                                         Target EBITDA


 


For
2009, budgeted EBITDA as approved by Generac’s Board of Directors serves as the
target.


 


·                                         Financial Portion


 


That
portion of the bonus Program tied to specific financial goals of the company as
applicable.  For 2009, the Financial Portion will be 100% of the participant’s
Target Award Level.


 


·                                         Target Bonus Award Level


 


Target
bonus award level is the target annual incentive level that has been
established for each  participant under the Program. Target award
is expressed as a percentage of the participant’s base  salary.


 


·                                         Target EBITDA Budget Levels


 


Target
EBITDA budget levels established for 2009 that will serve as a multiplier of up
to 3 times  the Target Bonus Award Level.


 


·                                         Base Salary


 


Base
salary is the salary earned or actually paid to the participant during the
fiscal year disregarding  deferral elections, premiums, allowances,
expense reimbursements, commissions, incentives,  severance or termination
pay, and payments under deferred salary or long term incentive  agreements.


 

















 


TARGET BONUS AWARD LEVELS


 


For
2009, the target bonus award levels range from 15% - 35% of base salary, as
determined by position  level and responsibilities.


 


The
maximum bonus award payable under the 2009 EMIP is equal to 105% of base
salary.  


 


BONUS AWARD CRITERIA


 


For
2009, bonus awards are based upon the following criteria:


 


Financial
Performance


 


100%
of the target award is based upon achieving target corporate EBITDA budget
levels.  


 


2009
Target EBITDA Budget Levels chart:


 





 


BONUS AWARD CALCULATIONS


 


At
the conclusion of the 2009 fiscal year, the award earned by each participant is
calculated based on the  financial performance of the company.


 


Financial Performance


 


Bonus
Incentive Earned  =  Target bonus award level  x  Target
EBITDA budget level  x  Base Salary achieved for 2009


 


Bonus
award is payable under the financial portion only if actual EBITDA achieved is
greater than  92.5% of target EBITDA.


 


The
target opportunity is earned if the established performance goals are exactly
achieved. Depending on  how actual EBITDA performance compares to
EBITDA budget, the actual incentive earned will be  based on a sliding scale
ranging from 0 to 3 times the target opportunity.


 


·                  Example: A VP with a base
salary of $150,000 has a target bonus level of 25% hits the target EBITDA
budget at level 2. Result = $150,000 x 25% x 2 = $75,000 bonus


 

















 


ADMINISTRATION


 


1.              Individuals who
become eligible to participate in the Program after the beginning of the 2009
fiscal  year (a “Program Year”) through either promotion or hire will be
eligible for an incentive award prorated to reflect such participant’s service
during the Program Year.


 


2.              In the event a
participant’s target award level changes during the Program Year, the
participant’s  award will be pro-rated based on the time
that he or she participated in each target award level  category.


 


3.              If a
participant terminates for reason of retirement, disability or death, any award
earned will be prorated based on the number of days worked in the Program Year
and will be paid in accordance with  the terms and conditions of
the 2009 EMIP.


 


4.              If a
participant’s employment is terminated either voluntarily or involuntarily for
any reason (other  than retirement, disability or death) during
the Program Year, no bonus award will be due or payable.


 


5.              The 2009
incentive award will be calculated using December 31, 2009 base salary.


 


6.              All awards
payable will be made by separate check, less applicable withholding and taxes,
on or  before March 15, 2010. Except as otherwise noted in #4 above,
individuals must be actively  employed at the time of
disbursement to be eligible for an incentive award payment.


 


7.              The Generac
Compensation Committee may, in its sole discretion, amend, modify, suspend or  terminate this
Program at any time.


 


8.              The Program is
not and should not be construed as a contract of employment between the company  and any
eligible employees or other person.


 


9.              The 2009
Executive management Incentive Program (EMIP) replaces all bonus programs that
may  be in existence and replaces any Bonus/Incentive parameters set forth
in the individual offer letter.


 


10.       The Generac Compensation
Committee shall be responsible for the calculation and final  determination
of any and all individual awards and will be responsible for the administration
of the  2009 EMIP.